Opec forecast forces oil even higher

OIL prices hit fresh highs above $55 a barrel in New York, as Opec raised its forecast for global demand and dealers predicted the price could spiral to $75.

Prices have surged 80% this year though, if adjusted for inflation, they remain around 40% below the peak seen in 1981.

Oil cartel OPEC revised its forecast for global demand in 2004 from 81.58m up to 81.79m barrels a day due to stronger-than-expected economic growth. However, it edged down its growth forecast for 2005, as it expects the high oil prices to hit consumption.

Chicago Board of Trade chief executive Bernard Dan says the US economy will not be hurt significantly by the spike. He reckons most traders have factored a price of $60 to $75 into forecasts.

CBI boss Digby Jones warned that high energy prices threaten recovery in the manufacturing sector while the union Amicus says we could be facing a winter of blackouts and further electricity price hikes.